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Music royalty issue resolved; radio players to now pay 2 pc of ad revenues as royalty tax

26-August-2010
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Music royalty issue resolved; radio players to now pay 2 pc of ad revenues as royalty tax

The bitter tussle between radio operators and music companies over royalty payment has come to an end with the Copyright Board recommending a revenue sharing model, as opposed to the earlier norm, which required the radio industry to pay as much as 20 per cent of their revenues as royalties.

Now, around 2 per cent of the net advertising revenues of radio companies will be given as royalty tax to the music companies, which will provide some much needed relief to radio operators, who have been struggling with lower profitability on account of high royalty burden in the past.

Earlier, radio operators had to shell out around Rs 850 per hour as royalty to music companies. About Rs 660-670 per hour is currently paid to Phonographic Performance, while another Rs 170-180 goes to IPRS. Set up in August 1969, IPRS is a non-profit body representing owners of music – composers, lyricists, publishers, etc.

The Copyright Board was authorised to decide on the royalty rates for the industry, as per a Supreme Court judgment dated May 16, 2008. Earlier this year, the Copyright Board had asked both the fraternities – Radio and Music – to file evidences supporting their stand on the royalty issue.

Positive move, say radio players

Reacting to the development, Apurva Purohit, CEO, Radio City, said, “It’s a long awaited judgment. The case has been going on for several years in various courts. We are happy that there is a resolution of the matter and firmly believe that it would benefit both the radio and music industries. Acceptance of the revenue share model, which is an international practice, would go a long way in improving the profitability of small stations and networks which were bleeding under the impact of the fixed fee regime.”

It may be recalled that Music Broadcast Pvt Ltd (MBPL) was the first radio station to take up the issue of music royalty and the rest of the radio stations followed the suit.

Soumen Ghosh Choudhury, Business Head, Big FM, said, “We haven’t received any official communiqué on this from the Copyright Board yet, and hence, need to understand this better. However, prima facie it does seem to be a very positive move. Music royalty has been an issue for a while now, and this is sure to bring some respite to the industry. With Phase III on the anvil, the timing couldn’t have been better. If the music royalty issue is sorted, it will further fuel Phase III growth for the FM industry and allow broadcasters to deepen footprint while offering advertisers greater reach.”

Also read:

Copyright amendment a shocker, but smaller FM stations resort to less talk for survival

FM players fear death knell for biz if music royalty issue not resolved soon

Music royalty issue delays Phase III FM bidding

Music royalty issue: ‘Don’t kill the golden goose’, radio industry tells music industry

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